An LLC is a Limited Liability Company (LLC). It’s my fav business entity for new online biz owners.

There are several advantages to an LLC, especially for smaller businesses. One of the main draws of this type of legal entity (versus a sole proprietorship or partnership) is an LLC offers protection for personal assets in the event of a judgment from a lawsuit against the business.

This means *if* something goes wrong, your personal assets are separated from your biz assets and if you do lose, it doesn’t mean you lose your shirt/house/car, literally -- they can only get what is in your biz account.

Other benefits of an LLC include not having to use your own social security number for your Federal Tax ID number (EIN) and utilizing your LLC to open a business banking account. PLUS, being an LLC looks LEGIT to your clients - big bonus!

So when and how do you incorporate?

It’s true that deciding when to incorporate your new business as an LLC is a tough decision. There are differing views on when is the best time – one point of view is to wait as long as possible to avoid spending money and to ensure the business is viable.

The other thinking is the earlier the better to ensure legal protection and have standing ASAP.

If you are not making any money yet or are not worried about being held personally liable for any mishaps, is it necessary?

On the other hand, what if your business goes from zero sales to 100 in a few days and you are left without the necessary documents, bank accounts, etc. in place?

In the online world, going viral can happen at the drop of a hat – better to be ready than wishing you had taken the necessary preparations earlier!

As an attorney, I always advise people to incorporate ASAP after they have a viable business going. It usually is not that expensive (ranging from $100-1000 depending on the state) and you can set everything up directly through your state's secretary of state or similar - just google your state + set up LLC and you should find what you need!

You can register a very broad business (e.g., ‘for any purpose a corporation may operate as’) so that even if you change course, you can still keep the same LLC. I also suggest to incorporate under either your name or a fairly generic name in case you do slightly change businesses.

Notice: This website is provided for informational purposes only and is not a law firm. The information here does not constitute legal advice and purchasing products does not establish an attorney-client relationship.